Despite recent market fluctuations, Palantir Technologies (PLTR) was a top-performing stock throughout 2024 and early 2025. However, the stock’s impressive gains have resulted in a high valuation, with a forward price-to-sales (P/S) multiple of 52 times analysts’ 2025 revenue estimates. The company has shown accelerating revenue growth, with revenue climbing 36% last quarter, driven by a 64% jump in U.S. commercial revenue.
Palantir’s success is rooted in its focus on the application and workflow layers of artificial intelligence (AI). The company aims to be an AI operating system for its users, creating a platform that helps organizations deploy AI applications effectively. The company’s use of AI boot camps has been highly effective in attracting commercial clients, and they now have a significant opportunity to transition these clients from proof-of-concept projects to full-scale production.
However, Palantir’s close ties to the U.S. government, its largest customer accounting for over 40% of revenue in the fourth quarter, introduce considerable risk. The government is currently implementing significant cost-saving measures, including an 8% annual budget reduction for the Department of Defense over the next five years. The impact of these cuts on Palantir remains uncertain, highlighting a key risk factor for investors. Given Palantir’s lofty valuation and customer concentration, let’s examine two alternative, more attractively valued software companies with strong AI strategies.
Salesforce: Pioneering Agentic AI
Salesforce (CRM) is a recognized leader in customer relationship management (CRM) software. Through strategic acquisitions of companies like Mulesoft, Slack, and Tableau, Salesforce has expanded into automation, analytics, and employee communication. Known for its history of innovation, the company was an early adopter of the software-as-a-service (SaaS) model, reshaping the software industry. Salesforce is now positioning itself to lead the next evolution in AI, known as agentic AI.
While much of the current focus is on generative AI, which creates content based on user prompts (like using ChatGPT), agentic AI goes a step further. Agentic AI is designed to autonomously complete tasks with minimal human intervention. For example, in wedding planning, it could not only create a task list (like ChatGPT) but also rent venues, hire vendors, and manage other required tasks. With its Agentforce solution, Salesforce is striving to be a frontrunner in agentic AI.
The Agentforce platform provides pre-built AI agents and allows customers to create their own using no-code or low-code tools. These AI agents can leverage any business knowledge to complete tasks while adhering to predefined constraints. Since its launch in October, Agentforce has garnered substantial customer interest, with 5,000 deals, 3,000 of which are paying customers. Agentforce is priced at $2 per conversation, presenting significant revenue potential if it can demonstrate cost savings for its customers. Additionally, the introduction of AgentExchange features 200 initial partners, including Alphabet and Workday, and hundreds of ready-made app actions, integrations, and templates to facilitate broader adoption. The stock is also reasonably priced, trading at a forward price-to-sales (P/S) multiple of under 7 and a forward price-to-earnings (P/E) ratio of 26.
SentinelOne: Bolstering Cybersecurity with AI
SentinelOne (S) is a rapidly growing AI-powered cybersecurity company that has a significant catalyst later this year. It specializes in endpoint security, which involves protecting devices such as smartphones and computers within a network. Its primary product, the Singularity Platform, uses AI to predict, monitor, and eliminate threats. SentinelOne competes with CrowdStrike (CRWD) and has been capitalizing on disruptions caused by a past outage experienced by its larger competitor.
SentinelOne’s platform is highly regarded in the Gartner Magic Quadrant for Endpoint Protection Platforms. A key differentiator for SentinelOne is its ability to automatically revert a client’s system to its pre-attack state, eliminating the lengthy manual fixes required by customers of competitor during an earlier outage. Last quarter, SentinelOne reported a record number of competitive wins against CrowdStrike, including a shift from a Fortune 50 company to its platform. SentinelOne has experienced huge success with its Purple AI solution, allowing analysts to hunt complex security concerns using natural language prompts. It has become the company’s fastest-growing platform.
A major catalyst is anticipated later this year as Lenovo, the leading PC vendor, begins shipping all of its PCs with SentinelOne’s Singularity Platform pre-installed. The two companies are also collaborating on a managed detection and response (MDR) service leveraging AI and endpoint detection and response (EDR) capabilities based on the Singularity Platform. Lenovo, with nearly 62 million units sold in 2024, presents significant potential for SentinelOne. The stock is also attractively valued, trading at a P/E ratio of under 5 times fiscal 2026 analyst estimates.
